The International Monetary Fund (IMF) has temporarily halted Bitcoin purchases by El Salvador's public sector under a newly approved $1.4 billion deal. The article outlines the agreement's terms and demands and the position of El Salvador's government.
Terms of the Agreement with the IMF
El Salvador agreed to pause any voluntary accumulation of Bitcoin by the public sector as part of a technical memorandum of understanding. This includes purchases and mining of the cryptocurrency. However, Bitcoin obtained through seizure, custody, and similar government actions is excluded from this category.
Transparency and Reform Demands
The IMF suggested reforms in Bitcoin regulations to mitigate risks, clarifying Bitcoin's status as a non-mandatory legal tender. Tax obligations are now payable only in US Dollars. El Salvador also committed to increasing transparency for transactions through the Chivo Wallet and Fidebitcoin Trust, including providing reports on cold wallets controlled by public sector entities.
El Salvador's Stance and Future Steps
Despite the agreement with the IMF, El Salvador's government purchased an additional 5 Bitcoins, bringing the total balance to 6,100 BTC. President Nayib Bukele affirmed the country's intention to continue buying, despite the fund's cautions. The national bitcoin office director also confirmed maintaining Bitcoin as legal tender.
The IMF's decisions and El Salvador's actions highlight the complexities of integrating cryptocurrencies into government management systems. Regulation and transparency will be crucial as the situation develops.
